Washington Fire Damage Property Laws: Form 17, IFCA and the Excise Tax

Form 17 Is Mandatory, and It Is Not a One-Off

Washington sits with Texas, New York and Pennsylvania rather than with Georgia, Arizona, Massachusetts or California: the disclosure statement is required rather than customary. Under RCW 64.06 a seller of most improved residential property must complete and deliver it, generally within five days of mutual acceptance unless the buyer has waived receipt in writing.

The form records what the seller actually knows at the time of signing. Answers are yes, no or don't know, with an explanation required for a yes, across title, structure, systems, permits, environmental matters and association issues.

What Is the Buyer's Rescission Right?

Three business days from delivery of the disclosure statement, exercised by delivering a separately signed written statement of rescission. It is at the buyer's sole discretion rather than for cause. On rescission the earnest money is returned immediately and the purchase agreement becomes void.

Now the provision that matters on a fire file. Under RCW 64.06.040, where a seller learns, from a source other than the buyer or the buyer's inspector, of additional information or an adverse change that makes any disclosure inaccurate, the seller must amend the statement and deliver the amendment. The buyer then has a fresh three business day right to rescind from receipt of the amendment.

How Do I Stop the Rescission Clock Restarting?

Two ways. Make the original disclosure complete, which on a fire-damaged property means finding out what is actually wrong before you sign rather than during escrow. Or take corrective action that restores the accuracy of the disclosure, or corrects the adverse change, at least three business days before closing, in which case no amendment is required.

One protection sits alongside all of that. Under RCW 64.06.050 a seller is not liable for an error, inaccuracy or omission in the disclosure statement where the seller had no actual knowledge of it. The obligation is a knowledge obligation. It does not require you to investigate, though on a fire file investigating is usually in your own interest for the reasons above.

Limited exemptions from Form 17 exist under RCW 64.06.010, including certain estate transfers, foreclosures, and transfers by trustees or by sellers who have never occupied the property. Whether one applies is worth confirming rather than assuming, particularly on inherited property.

The Insurance Fair Conduct Act

Washington voters approved the Insurance Fair Conduct Act by referendum in 2007, and it gives first party policyholders a remedy that most states do not.

Under RCW 48.30.015, a first party claimant unreasonably denied a claim for coverage or payment of benefits may bring an action in superior court for actual damages, costs and reasonable attorney's fees. On a finding that the insurer acted unreasonably, the court may increase the total award to up to three times actual damages, and may award actual and statutory litigation costs including expert witness fees.

The statute expressly ties itself to the administrative claim handling rules, including WAC 284-30-370 on prompt investigation and WAC 284-30-380 on prompt, fair and equitable settlement. A violation of those rules is a route into the statute rather than merely a regulatory complaint.

What Are the Underlying Claim Handling Standards?

An insurer must complete its investigation within thirty days of notification of the claim unless it cannot reasonably be completed in that time. Where more time is needed, notification must follow within forty-five days of the initial notice and every thirty days after that, explaining why the claim remains unresolved.

The pre-suit requirement is where files are lost. Twenty days before filing an IFCA action, a first party claimant must provide written notice of the basis for the cause of action to both the insurer and the Insurance Commissioner. Serving that notice within the limitation period tolls the statute of limitations for those twenty days.

We publish no guidance on drafting an IFCA notice or on limitation periods for a particular claim. The notice content and timing are consequential, policies commonly contain their own suit limitation provisions, and this is emphatically a lawyer's area. What we will say is that a denied fire claim in Washington is worth a conversation with one.

The Excise Tax

Washington charges a real estate excise tax on the sale of real property, customarily paid by the seller, with a state component graduated by sale price and a local component added on top. The graduated structure means the rate is not a single number, and the brackets have been adjusted since the graduated system was introduced.

Because the tax is a percentage of price and comes off the seller's side, it belongs in your net calculation before you compare offers rather than after. Your closing agent will quote the combined state and local figure for your specific price.

Your Four Exits, Compared

Repair and list. Highest gross, and it also produces the cleanest disclosure, because a repaired property has a settled condition rather than an evolving one.

Sell as it stands. Lower gross and faster, and the disclosure risk is highest here because the condition is least settled. Establishing the damage properly first is what makes this route work.

Demolish and sell the lot. On a cleared parcel the disclosure question largely falls away with the structure, though land conditions including slope and soils remain disclosable.

List on the open market as-is. Reaches retail buyers, though a lender will not finance a structure that cannot pass inspection. The Form 17 obligation and the rescission right apply identically.

How the Answer Varies Across Washington

The statutes are uniform statewide. What is local is the permitting and the physical setting, and Washington varies more than most states on the second: Spokane, Tacoma, Vancouver, Bellevue, Everett, Kent, Renton, Olympia, Bellingham and Yakima each run their own departments across very different terrain.

Within Seattle there is one department for the whole city, so what changes between neighbourhoods is the ground and the building. The steep and slide-prone areas are covered under a peninsula of bluffs and steep lots and hillside neighbourhoods with slope overlays. Older flat-lot housing behaves differently in a district of older frame houses and a south-end area of mixed stock, while an area where upzoning has changed what lots support and the northern neighbourhoods of post-war housing complete the set.

The full index is on our service area index.

State-Scope Questions

Can I Refuse to Complete Form 17?

Not on most residential transfers. Limited exemptions exist, including certain estate and foreclosure transfers, but they are narrow and worth confirming rather than assuming.

Does a Buyer Need a Reason to Rescind?

No. The three business day right is at the buyer's sole discretion, and on delivery of a written rescission the earnest money is returned and the agreement is void.

My Insurer Denied the Claim. Is That Final?

Not necessarily. IFCA provides a remedy including up to treble damages and attorney's fees where an insurer acted unreasonably, subject to a mandatory twenty day pre-suit notice to the insurer and the Insurance Commissioner. Take advice.

Primary Sources

RCW 64.06.010, 64.06.013 and 64.06.020 — exemptions, format and the rescission language
RCW 64.06.040 and 64.06.050 — amendment duty and the actual knowledge limitation
RCW 48.30.015 — Insurance Fair Conduct Act and the twenty day notice requirement
WAC 284-30-370 and WAC 284-30-380 — investigation and settlement standards
Washington Office of the Insurance Commissioner — consumer complaints and claim guidance